In September 2010, I wrote about extreme risks—those potential events that are unlikely to occur, but if they did, would have a significant impact on economic growth and asset returns.
Everyone knows why organizations around the world have been closing down their DB pension plans in recent years: in a Sophie’s Choice of sorts, they have opted to reduce risk on behalf of shareholders rather than absorb risk on behalf of employees. A 2003 Morneau Shepell survey confirmed this. The question is whether or not there is a more tangible way to express that risk.
“No one has invented the perfect way to manage large pools of money,” says Rick Abbott, the former director of investments for the Winnipeg Civic Employees’ Benefits Program. In June 2010, he retired as director after 18 years in the role and 40 years as an investment manager. “You can’t have a perfect strategy because […]
Watch this video There’s a perception that DC plan members don’t feel responsible for managing risk, says Marcus Turner, senior investment consultant with Towers Watson Canada Inc. Anecdotally, this disengagement has been attributed to members feeling like they don’t have to take responsibility because they belong to a large corporation that will take care of […]
Global index provider FTSE Group has expanded its Diversification Based Investing (DBI) Index Series to include emerging markets. Like the FTSE DBI Developed indexes, launched in September 2010, the FTSE DBI All Emerging Markets Index is non-market capitalization weighted, promoting diversification across countries and industry sectors. The philosophy behind the index is that both geography […]
After enduring two equity market crashes in the past decade, most investors are now approaching risk management with renewed emphasis. In this new reality, pension plan sponsors are forced to assess the evolution of risk management techniques and current approaches to managing pension funding volatility. The bear market of 2000–2002 was a wake-up call to […]
One of the major determinants of an investment strategy is the investment time horizon. How long an investor has to invest the money before it is needed greatly affects the way the money is invested. The conventional wisdom is that a longer time horizon allows for a greater allocation to riskier investments with a higher […]
The capital market volatility of the past few months has been unsettling for pension plan sponsors and participants alike. Even before Standard & Poor’s downgrading of the U.S. credit rating, indicators pointed to deterioration in the financial position of most DB plans. For one, accounting discount rates for many plans decreased by 50 to 60 […]
Originally from our sister publication, Advisor.ca. Should investors chisel their portfolios onto granite and wait them out for the long haul, regardless of what happens in the markets on a monthly, quarterly or yearly basis? Or should money managers take a more flexible approach to the way they slice up their clients’ asset class percentages? […]
Northern Trust has enhanced its asset and liability risk reporting to help pension fund clients monitor their coverage ratio risk over different time zones. The reporting uses multiple risk models to deliver scenario and factor stress testing data. The enhanced risk reporting solution includes simulation techniques to project coverage ratio development over the coming year […]